Banks: The Esfandiar’s Eye of the System

TEHRAN (Iran News) The Islamic Republic of Iran emerged from a revolution grounded in 1,400 years of faith-based principles. These religious foundations have been tempered through centuries to withstand any ideology—whether materialist, syncretic, false mysticism, or even new social schools of thought—leaving enduring guidance. However, in the management of money and financial policy, even with the Quran’s explicit guidance that “wealth is a tool of survival; do not entrust it to fools,” the system’s inexperience and mismanagement caused irreparable harm to both the nation and its people over the 47 years of the revolution. One can liken this mismanagement to what the Quran calls folly in handling wealth.

Sadeq Amoli Larijani, former head of the judiciary and current chairman of the Expediency Council, recently addressed this destructive role of monetary policy and banks in a speech on Student Day, December 9, 2025. He candidly admitted that the system erred in privatizing banks and relinquishing control over monetary management. He criticized the establishment of private banks, stating, “The creation of private banks, which began even before Ahmadinejad, was 100% wrong!” He further noted that this system had become a “private haven for corrupt activities.”

Larijani also highlighted the Central Bank’s five-year neglect in dealing with the Future Bank crisis, which then spread to other banks such as Bank Sepah, stressing the need for corrective measures.

I myself, back in 1992, criticized the initiation of private banking by Mohsen Nourbakhsh, then head of the Central Bank, supported by Akbar Hashemi Rafsanjani, in an article summarized in the Central Bank bulletin. Despite this, the Central Bank hastened the establishment of numerous private banks, cementing a policy that became nearly irreversible.

For 33 years, this model of banking—mirroring the English system imposed in many British colonies to dominate monetary control—has perpetuated devastating inflation and created a nouveau-riche class. It produced an unbelievable Gini coefficient and competitive interest rates in a country where usury (riba) is strictly forbidden, effectively becoming the Achilles’ heel of the Islamic system.

Since those early years, I have consistently advocated in speeches and writings for a unified banking system under ten specialized organizations. Under this model, a Central Bank is unnecessary. Oversight of the specialized organizations could be conducted under a single banking authority, which would both rectify past mistakes and ensure proper, faith-aligned use of financial resources.

We must remain vigilant. I will hold accountable those responsible in the afterlife and challenge the deaf ears of those who, over 33 years, created this Achilles’ heel of the system.